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Amazon and Rackspace Teaming Up in The Cloud?

If rumors are to be believed - a collaboration is going to come out in the open at Amazon's AMZN huge tech conference for its cloud computing business next week in Las Vegas. And this revelation will shock the cloud computing industry.

The couple in question? Amazon and Rackspace RAX .

According to the Wall Street Journal, Amazon will partner with Rackspace to help enterprise customers move their tech into Amazon's cloud.

From Rivals to Partners

Two years back, the two companies were such fierce competitors that a team up would have been unthinkable.

However, things changed in early 2014. Rackspace was countering declining margins in the midst of a cloud-computing price war and thus it stepped back from a neck-to-neck competition with Amazon.

Instead, it started focusing on offering higher quality and higher-margin cloud computing services with brilliant customer service, something that Amazon has a poor reputation for.

While both Amazon and Rackspace have declined to comment on the WSJ report, one thing is for sure - Microsoft MSFT will definitely be threatened.

The Microsoft Angle

Rackspace had inked a similar deal with Microsoft in July, so the outcome of that alliance looks somewhat unclear.

According to the deal, Rackspace would help companies transfer their workloads to Microsoft's Azure cloud-computing platform.

It appears that Rackspace is changing tactics yet again as it keeps its options open in the rapidly growing and constantly changing cloud computing market.

Going Ahead

Amazon Web Services (AWS) is a cloud-based platform helping companies to develop their online presence. AWS provides tools that support website production, social media and mobile applications that have taken the company to the leadership position in the infrastructure as a service (IaaS) space.

As Amazon continues to expand and competition heats up, partnerships like the one between AWS and Rackspace will become increasingly important.

According to John Rymer a principal analyst with Forrester Research, "For the average enterprise, to really get value out of the cloud, they need a lot of help." And that's exactly why there's plenty of opportunity for Amazon, Rackspace, Microsoft, Google GOOGL and many others.

Amazon clearly benefits from this deal, but it's more crucial for a company like Rackspace as it continues to struggle for relevance in this rapidly changing market.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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